Premium Rate Review Process

What is a Premium Rate?

A premium is the monthly payment you or your employer pays for health coverage. The premium rate is the term for a health plan’s base rate from which is specific premium is calculated. The base rate is adjusted by age, family size and geographic location to determine the unique premium you would pay for health care coverage.

Rate Review Helps Protect Consumers from Unreasonable Rate Hikes

The DMHC reviews proposed health plan rate changes and asks health plans questions about their changes to make sure health plans are providing detailed information to the public to support any rate increases. While the Department does not have the authority to deny rate increases, its rate review efforts hold health plans accountable, ensure consumers get value for their premium dollar, and saves Californians money.

The Department’s premium rate review program has saved Californians millions of dollars by negotiating lower premium increases or no premium increases when increased rates aren’t supported.

Understanding the Rate Review Process

A health plan submits a premium rate filing to the DMHC. The filing includes information on the proposed premium rate change including supporting data, the number of members impacted and the date the increase becomes effective.

DMHC actuaries review the rate filing, supporting data including underlying medical costs and trends to determine if the proposed rate change is supported.

DMHC determines if the information submitted in the rate filing supports the proposed premium rate change. If the health plan provides data and information supporting the rate, the filing is closed as complete. If the rate is not supported and the health plan refuses to adjust the rate, the DMHC finds the filing unreasonable. If the DMHC finds the filing unreasonable, the health plan must notify members of the unreasonable finding.

Understanding a Premium Rate Review Filing

The following tutorial walks through where to find important information on a premium rate filing with the DMHC.

Filing Overview:The Filing Overview provides general information on a health plan’s premium rate filing including what stage of review the filing is in called the filing status, if the product is offered on the exchange through Covered California, the number of members impacted by the rate changes, and the average, minimum and maximum rate increase.

DMHC Review:This section provides the outcome of the DMHC’s review of a health plan’s premium rate filing. The DMHC does not have the authority to approve or deny rate increases; however, the Department’s review improves accountability in health plan rate setting and often results in a reduction in the proposed rate increase saving Californians millions.

Filing Details:The Filing Details provides information on several of the factors a health plan uses to develop its premium rate including medical costs and trends, utilization and administrative costs. Medical costs are where the biggest part of premium dollar must be spent. Health plans must spend at least 80 to 85 percent of every dollar on medical costs such as hospitals, doctors, prescription drugs and other services for its members, as well as costs to improve the quality of care.

Attachments:This section includes documents associated with the premium rate filing.

Comments:You can submit comments on health plan premium rate filings that are currently under review by the DMHC. The Department will consider public comments as part of its review of the premium rate filing.